Maryland Financing and Incentive Resources Report by Maryland's Department of Business and Economic Developemtn

Maryland is one of only eight states with a AAA general obligation bond rating from the three major bond rating houses

The Maryland Department of Business and Economic Development (DBED) Office of Finance Programs provides the business community financing and incentive based solutions for economic development projects to maximize job creation and retention, leverage capital investment and encourage growth in targeted business sectors and specific geographic areas throughout the state. To remain competitive in the market place, the Department responds quickly to changing requirements by developing incentives that address the business community’s needs.

FINANCE INCENTIVES PROVIDE: • Entrepreneurs with access to capital markets • Funding of economic development efforts for local jurisdictions • Employment opportunities by attracting, creating, expanding and retaining businesses • Impetus to encourage capital investments and job creation

BUSINESS RESOURCES Economic Development Opportunities Program Fund (Sunny Day) The fund supports extraordinary economic development opportunities that create and retain employment as well as create significant capital investments. Projects must generate significant jobs in areas of high unemployment; they are evaluated on a competitive basis. Maryland Economic Development Assistance Authority and Fund A flexible and broad-based program, MEDAAF funds grants, loans and investments to support economic development initiatives. Uses include business attraction and retention, infrastructure support, brownfield redevelopment, arts and entertainment districts, daycare, revolving loan funds and local strategic planning. Projects must be within Priority Funding Areas and eligible industry sectors. Awards are made on a competitive basis.

MEDAAF Capabilities

Specifics

$ Amount

Strategic Economic Development Opportunities

Available on a statewide or regional level

Maximum assistance cannot exceed $10 million or 20% of current fund balance

Local Economic Development Opportunity

Provided to businesses that provide an economic development opportunity to the jurisdiction. The local jurisdiction must sponsor the business and can participate in the form of a guarantee, direct loan or grant equal to at least 10% of State’s financial assistance

Loans up to $5 million; conditional loans & grants up to $2 million

Direct Assistance to Local Jurisdictions or MEDCO

Use of funds includes land acquisition, infrastructure improvements, acquisition of fixed assets, leasehold improvements, up to 70% cost of feasibility study and up to 50% of cost of preparing local economic development strategic plan

Total amount cannot exceed $3 million unless a “qualified distressed county”

Regional or Local Revolving Loan Fund

Eligible applicants include county or regional development agency

Grants up to $250,000 annually for each jurisdiction

Assistance provided to a business in form of loan

A jurisdiction may transfer all or part of its allocation to a regional revolving loan fund Local government must provide matching grant funds to local revolving fund Special Purpose Programs

Targets specific funding initiatives deemed critical to state

Varies by program

The program determines level and type of financial assistance Special purpose programs include Brownfields, Arts & Entertainment, Child Care Centers, Seafood & Acquaculture and Animal Waste

Five financing capabilities are offered through MEDAAF to the business community and political jurisdictions.

Life Technologies | A global biotechnology tools company, created by the merger of Invitrogen and Applied Biosystems, Life Technologies is expanding its manufacturing and research development capabilities at its Frederick facility with the aid of $500,000 MEDAAF grant and expects to invest $6 million in the expansion project costs. The company, with 900 employees, posted sales of $3.3 billion in 2009.

Garrett County Career and Technology Training Center | In conjunction with $500,000 in county support, Maryland’s most western county received a $1 million grant through MEDAAF for a new training center that provides career training skills to community college students, new high school graduates and adults in specialty trades such as welding, machining, metal fabrication, HVAC, masonry, carpentry, CAD/ CAM, metal finishing/painting and robotics.

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Requirements: – A pplicants must be in a technology industry. Areas of technology include life sciences– therapeutics, medical devices and diagnostics and information technology–software, communications and IT security – The applicant must agree to maintain its principal place of business in Maryland for five years – A minimum 3:1 match by a sophisticated investor is required

CREDIT ENHANCEMENTS

Military Reservist and Service-Disabled Veterans No-Interest Loan Program This program provides loans of up to $50,000, from one to eight years, for businesses owned by military reservists, service-disabled veterans, active duty National Guard personnel and businesses that employ or are owned by such persons.

CAPITAL INVESTMENTS Maryland Venture Fund The MVF administers several programs including the Challenge and Enterprise Investment Programs, to provide emerging high-technology businesses access to early-stage capital. Investment decisions are based on the project’s potential return, the promotion of economic development and the creation of jobs. MVF targets emerging technologybased businesses including biotechnology, information technology, telecommunications, software development and advanced materials. • Challenge Investment Program Provides financing for seed-stage companies to cover a portion of the initial costs associated with bringing new products to market. Initial investments of $50,000 to $100,000 are made with incremental investments to a maximum of $150,000. These incremental investments are

awarded based upon the client’s performance and the client’s ability to achieve milestones set by the Maryland Venture Fund at the time of the initial closing. Requirements: – B usiness must have less than 25 employees and annual sales less than $1 million – Minimum 1:1 co-investor match is required – A pplicants are limited to high tech companies whose principal place of business is located in Maryland – C ompany must remain in Maryland for at least three years – Company must be positioned for additional Venture Capital

• Enterprise Investment Fund Program Makes direct equity investments in emerging technology companies, usually at the first round of institutional financing and works with emerging companies to move them into their next stage of development as a viable business. The amount of investment ranges from $150,000 to $500,000. Enterprise investments are generally in the form of equity, but follow the terms of the lead investor.

Maryland Industrial Development Financing Authority MIDFA encourages private sector investments through the use of insurance, the issuance of taxexempt and taxable revenue bonds, and linked deposits. Insurance reduces the lender’s credit risk. All projects must be in a Priority Funding Area. • Credit Insurance – Bond Program: Insures bonds up to 100 percent, not to exceed $7.5 million of taxable or taxexempt bonds – Conventional Program: Insures up to 80 percent, not to exceed $2.5 million of a transactions made by a financial institution. Export transactions may be insured up to 90 percent – Linked Deposits: In designated distressed jurisdictions, MIDFA can provide a certificate of deposit to lender as a funding source and pricing incentive to provide below market rate loans to an eligible small business. This certificate is not a guaranty or collateral to the loan • Private Activity Revenue Bonds – Taxable Bond: Provides access to long-term capital markets for primarily fixed asset financing.

– T ax-Exempt Bond: Provides access to long term capital markets for fixed asset financing at tax-exempt rates. Eligibility is limited by Federal tax law to 501(c)(3) non-profit organizations, manufacturing facilities and certain solid waste projects. Additional limitations apply to the specific transaction type

Maryland Small Business Development Financing Authority Promotes the viability and expansion of businesses owned by economically and socially disadvantaged entrepreneurs, MSBDFA clients include all small businesses unable to obtain adequate business financing on reasonable terms through normal financing channels. A private contractor manages the four MSBDFA components and the Department provides financing for the approved small businesses. • C ontract Financing Program Loan guarantees and direct working capital and equipment loans to socially or economically disadvantaged businesses that have been awarded contracts mainly funded by government agencies and/or public utilities. • Equity Participation Investment Program Direct loans, equity investments, and loan guarantees to businesses in franchising, technology-based industries, and for the acquisition of profitable businesses. • Long-Term Guaranty Program Provides loan guarantees and interest rate subsidies. • Surety Bonding Program Assists small contractors in obtaining bonding for primarily funded government or public utilities contracts that require bid, performance, and payment bonds.

Moodlerooms | Located in Baltimore City, Moodlerooms, a leader on e-learning, received the “Best Information Technology Company of the Year” award at the 10th annual Maryland Incubator of the Year Awards. The Maryland Venture Fund Enterprise Investment Program provided $400,000 to Moodlerooms which has grown from five employees in 2007 to 30 in 2009 with projections to reach 70 by the end of 2011.

Key Maryland Business Lending Resources Program Name and Sponsor

Products

Uses

Eligible Applicants

Terms & Conditions

Target Audience

Maryland Economic Development Assistance Authority and Fund/Five financing capabilities available

Loans Grants Investments

Land acquisition, infrastructure improvements, buildings, fixed assets, leasehold improvements, working capital, studies, strategic plans, revolving loan funds, and special purposes

Below market financing to specific industry sectors locating or expanding in a Priority Funding Area

Assistance cannot exceed the lesser of $10 million or 20% of the current fund balance

Businesses in eligible industry sectors

Maryland Industrial Development Financing Authority

Loan Guarantees Bonds

Land acquisition, building acquisition, construction cost, machinery and equipment, furniture and fixtures, leasehold improvements, certain eligible “soft costs,” energy-related projects and working capital

Commercial and industrial businesses (with the exception of retail), manufacturers, notfor-profit entities and day care providers

Financial obligation may be up to 80% of loan amount not to exceed $2.5 million, insurance on export transactions may be up to 90% of obligation, insurance of taxexempt, taxable and energy bonds issued by MIDFA may be up to 100% of bond amount not to exceed $7.5 million

Financial Institutions

Maryland Industrial Development Financing Authority

Small Business Recovery Guarantees

Fixed assets and working capital

Commercial and industrial businesses (with the exception of retail), manufacturers, notfor-profit entities and day care providers

Up to $50,000 not to exceed 50% of loans up to $100,000, up to $250,000 not to exceed 25% of loans up to $1 million

Financial Institutions

Maryland Small Business Development Financing Authority / Contract Financing

Direct loans Loan Guarantees Equity Investments

Working capital, supplies and materials, and acquisition of machinery and equipment needed to complete a contract

Small businesses that do not meet the established credit criteria of financial institutions, and consequently are unable to obtain adequate business financing on reasonable terms through normal financing channels

Loans and guarantees subject to cap of $2 million, equity guarantees limited to lesser of $250,000 or 10% of proposed equity investment

Small Businesses

Maryland Small Business Development Financing Authority / Equity Participation Investment

Loans Loan Guarantees Equity Investments

Land acquisition, leasehold improvements, acquisition of M&E, purchase of existing franchise, construction or renovation, and franchise fees

Franchising & business acquisition-equity investment or loan cannot exceed $2 million, with a term not to exceed 7 years

Small Businesses

Technology-loan or investment not to exceed $2 million, with a term not to exceed 10 years

Maryland Small Business Development Financing Authority /Guaranty Fund

Loan Guarantees

Working capital, acquisition of machinery or real property, and RE improvements

Guaranty term up to 10 years, loan guaranty may not exceed $2 million or 80% of loan amount

Financial Institutions

Maryland Small Business Development Financing Authority /Surety Bond Program

Bonds

To assist Maryland’s small contractors in obtaining bid, performance, and payment bonds for contracts, which receive the majority of their funding from federal, state, or local government

Term is life of the contract including warranty period, guarantee is lesser of 90% of a surety’s losses or $5 million, direct bond issue may not exceed $5 million

Small Businesses

Maryland Venture Fund

Challenge Investments

Initial costs of bringing new products to market

Seed-stage companies

Challenge initial investment $50,000 to $100,000

Enterprise Investments

Investment in next stage development

Emerging high-technology businesses

Enterprise investment ranges from $150,000 to $500,000

Biotechnology, information technology, telecommunications, software development and advanced materials companies

The biotechnology tax credit program has leveraged more than $50 million in private investment for Maryland’s biotechnology community FEDERAL INCENTIVES Community Development Block Grant The CDBG assists local governments in implementing commercial and industrial economic development projects. Approved program funds are disbursed to eligible local jurisdictions as conditional grants and used for public improvements for business start-up or expansion or business loans. Projects must create jobs with the majority targeted to individuals from low to moderate income or eliminate blight conditions that impede commercial and industrial development. Fund uses include acquiring fixed assets, infrastructure and feasibility studies. Maryland Economic Adjustment Fund MEAF assists small businesses with upgrading manufacturing operations, developing commercial applications for technology, or entering into and competing in new economic markets. Eligible businesses include manufacturers, wholesalers, service companies, and skilled trades. Funds can be used for working capital machinery and equipment, building renovations, real estate acquisitions and site improvements. TAX INCENTIVES Biotechnology Investment Tax Credit Maryland’s Biotechnology Investment Tax Credit provides income tax credits for investors in qualified Maryland biotechnology companies. The value of the credit is equal to 50% of an eligible investment made in a qualified Maryland biotechnology company during the taxable year. The maximum amount of the credit cannot exceed

$250,000 for investors. If the credit exceeds the tax liability, the remaining credit is refundable. The program has a program cap and credits are awarded on a first come, first serve basis.

BRAC Revitalization and Incentive Zone To focus growth in areas that are already designated for growth; provide local governments with financial assistance for public infrastructure in these well-defined areas; and align other state resources and programs to local governments and businesses located in the BRAC zones for a coordinated State effort on making the zones the focus of BRAC growth. Funds must be used for infrastructure improvements. Each year, the amount to be paid to all local jurisdictions is the amount appropriated in the State budget up to $5,000,000. If the total amount applied for exceeds the cap, each jurisdiction receives pro rata share. Cellulosic Ethanol Technology Research and Development Tax Credit The program provides income tax credits for expenses related to cellulosic ethanol technology research and development conducted in the State. The amount of the tax credit is equal to 10% of the eligible expenses incurred and cannot exceed the tax liability for that year. The maximum amount available in each year is limited to $250,000. Businesses must submit an application to DBED by September 15 for expenses incurred in the previous tax year. Enterprise Zone Tax Credit The Enterprise Zone program provides real property and state income tax credits for businesses that locate in a Maryland enterprise zone. The real property tax credit is 80% of the

Sierra Nevada Corporation (SNC) | A national leader in avionics, electronics and communications systems with 35 locations in 20 states, SNC is growing their Integrated Mission Systems division at the Hagerstown Regional Airport. A new 43,000 SF aviation hanger facilitates a contract from the Department of Homeland Security to equip the Customs and Border protection enforcement aircrafts. Sierra Nevada is eligible for Job Creation Tax Credits for creating 184 new jobs in Maryland over the last several years.

BioMarker Strategies | A Johns Hopkins spin off and developer of SnapPath™, for use in personalized management of therapy for metastatic cancer patients, BioMarker Strategies has benefited from the Maryland Biotechnology Investment Tax Credit. Over the last five years, the Program has allowed translation of $32 million in tax credits into $64 million in investment. In FY 2011, program funding was increased from $6 million to $8 million.

incremental increase in property taxes over the first five years, decreasing 10% annually during the next five years. The income credit is $1,000 credit per new employee. For economically disadvantaged employees, the credit increases to $6,000 per new employee over three years. Enhanced credits are available in enterprise zone focus areas.

Job Creation Tax Credit Businesses that create a minimum number of new full-time positions may be entitled to state income tax credits of up to $1,000 per job or $1,500 per job in a “revitalization area.” Businesses engaged in an eligible activity must create at least 60 new full-time jobs in a 24-month period; this is reduced to 30 new full-time jobs if they are “high wage” jobs, and reduced to 25 new full-time jobs if they are located in a Job Creation Tax Credit “priority funding area.” One Maryland Tax Credit Businesses that invest in an economic development project in a “qualified distressed county” and create at least 25 new full-time jobs may qualify for up to $5.5 million in state income tax credits. Project tax credits of up to $5 million are based on qualifying

costs incurred in connection with the acquisition, construction, rehabilitation and installation of a project. Start-up tax credits of up to $500,000 are available for the expense of moving a business from outside Maryland and for the costs of furnishing and equipping the new location. The credit can be carried forward 14 years and is refundable, subject to certain limitations.

Research and Development Tax Credit For Maryland businesses that incur Maryland qualified research and development expenses, the Basic R&D tax credit is 3% of eligible R&D expenses that do not exceed the firm’s average R&D expenses over the last four years and the Growth R&D tax credit is 10% of eligible R&D expenses in excess of the firm’s average R&D expenses. The credits are capped at $3 million each. If the amount of credits all businesses apply for exceeds the cap, each business receives a pro rata share. Businesses must submit an application to DBED by September 15 for expenses incurred in the previous tax year.

Under Armour | A home-grown success story and global sportswear giant, Under Armour continues to grow, taking advantage of several of the State’s workforce incentives, including the One Maryland tax credit. The company has more than 3,000 employees around the world and annual net revenues of up to $985 million.

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MARYLAND DEPARTMENT OF BUSINESS & ECONOMIC DEVELOPMENT Looking to start, expand or relocate a business? Our staff helps business owners of all sizes and sectors leverage resources, forge relationships and access industry specialists.The Department is your resource for economic, labor and license information and financial incentives.

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Services include: • Building and site location assistance • Finance programs, tax credits and training grants • Business advocacy and consulting • Technology transfer • Foreign direct investment • Export consulting and marketing • Tradeshow and conference partnership

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Maryland Enterprise Zones by County 1 Allegany – Cumberland

16 Montgomery – Long Branch Takoma Park

2 Allegany – Frostburg

17 Montgomery – Old Towne Gaithersburg

3 Allegany – Route 220 South

18 Montgomery – Wheaton

4 Baltimore – North Point

19 Prince George’s (focus area)

5 Baltimore – Southwest Baltimore County

20 Somerset – Crisfield

6 Baltimore City (focus area)

21 Somerset – Princess Anne

7 Cecil – Route 40 Corridor

22 St. Mary’s – Lexington Park

8 Dorchester – Cambridge

23 Washington – Hagerstown

9 Dorchester – Hurlock

24 Washington – Town of Hancock

10 Garrett – Central Garrett Industrial Park

25 Washington – Washington Co. Airport

11 Garrett – Keyser’s Ridge

26 Wicomico – Fruitland

12 Garrett – Northern Garrett Industrial Park

27 Wicomico – Salisbury

13 Garrett – Southern Garrett Industrial Park

28 Worcester – Berlin

14 Harford – Aberdeen/Havre de Grace

29 Worcester – Pocomoke City

Visit choosemaryland.org for: • Demographic and comparison data • Business licensing information • Business news and newsmakers • Economic and employment stats • Centralized event calendar

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15 Harford – Edgewood Twenty-nine enterprise zones are located throughout the state. Counties and municipalities are responsible for certifying a business as eligible for the tax credits

We can’t tell you what the future holds, but we can tell you where. Maryland. Land of Opportunity. Call today. A Business Representative is ready to assist you. 1.888.ChooseMD.

www.ChooseMaryland.org

401 E. Pratt Street • World Trade Center Baltimore, MD 21202 1.888.CHOOSEMD

Martin O’Malley, Governor Anthony G. Brown, Lt. Governor